Canadian Metals ready for the photovoltaic boom
For a junior miner, the stage at which diamond drill projects begin to formally define a resource is critical. If early results demonstrate that the resource is less valuable than previously thought, it can send investors running for the hills. Thankfully for Canadian Metals Inc. (CSE: CME) (“Canadian Metals”), the company’s latest drill program expanded the sandstone mineral body northeast by 250m, opening the door for further exploration of the now larger patch of land intended to produce a high-quality silica product for the spiraling solar power industry, which is expected to provide enough silicon demand to outstrip that of aluminium alloys within the next 10 years as a result of the booming photovoltaics (PV) market.
In addition to this, the company has recently confirmed that it will receive investment from the government of Quebec totaling $2.125m to contribute the development of the Hybrid-Flex silicon alloy plant in Baie-Comeau. This represents a significant portion of the $9.2m that Canadian Metals states will cover the implementation costs of the project, and confidence shown by the authorities is a reliable success marker. The company has amassed commitments of more than $4m since it announced its groundbreaking plant would be located at Baie-Comeau, meaning that the plan to advance to full feasibility this year is very realistic indeed.
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The ingenious Hybrid-Flex approach allows the company to switch between two production outputs at will, mitigating the effects of temporary price dips by producing more of the higher-value substance, enabling the company to meet the demands of both the steel and aluminium alloy markets, as well as supplying to the expanding solar power industry. Participating in what essentially amounts to “Construction & Energy” with a protective flexible approach should prove to be incredibly financially rewarding for Canadian Metals since numerous countries are currently engaged in massive PV expansion projects
The manufacture of photovoltaic cells has been in a rapid growth phase for a number of years now as the world strives for cleaner energy products, and as new technologies emerge every day it becomes increasingly likely that large-scale solar farms will be a key part of our future. This is borne out by the fact that, in only the last three years, India has quadrupled its solar capacity to 12.5GW, which it reportedly intends to increase by a further 10GW by the end of 2017.
Additionally, in Australia earlier this year, twelve such plants received full approval and funding, and when completed, will provide enough electricity for 150,000 homes and account for 10% of the new capacity needed to meet Australia’s 2020 renewable energy target. The plants originally received only A$92m in grants, but this sparked over a billion in private investment; clearly, sun-soaked nations are pushing solar power hard.
Even in the cloudy United Kingdom, where the government recently cut investment in solar units, the country still led Europe for solar growth with 29% of new capacity in 2016. Overall, however, the 50% growth in global capacity that was seen last year was largely driven by the US and China, bringing the worldwide total to over 300GW; considering that there was virtually zero solar capacity on Earth at the turn of the millennium, this is one of the most dramatic energy trends that we have ever seen, and it’s just getting started.
As we know, the release of a positive full feasibility study is the point at which a resource’s real value is decided, and before this point (commonly known as the “orphan period”; in which early speculators have departed, leaving share prices low) represents the prime window for long-term equity investors to make their bets. Once the project succeeds, a rapid and dramatic climb in the value of Canadian Metals’ share price would be seen, and at that point, opportunities to make the largest gains would have already been lost.
The future of silicon is split between solar power, aluminium and steel in terms of demand, the innovative plant has garnered considerable governmental approval, and the Langis sandstone deposit is 100% owned by Canadian Metals; given that the management team has over a century of experience between them, my confidence in the future of this particular mission is huge.
Lara Smith has spent over a decade covering commodity markets. She started her career as a buyside analyst in South Africa where she covered soft ... <Read more about Lara Smith>